Saudi Arabia’s Energy Minister said the OPEC+ alliance has a role in “taming and containing” inflationary pressures, just hours after Brent crude surged back above $75 a barrel.
The comments come as OPEC+ countries weigh whether to increase production further in the coming months. The oil cartel is scheduled to meet online next week to decide its production policy for August and beyond, after boosting output from May to July.
“We have also a role in taming and containing inflation, by making sure that this market doesn’t get out of hand,” Prince Abdulaziz bin Salman said Wednesday at a conference organised by Bank of America Corp., according to a recording of his remarks obtained by Bloomberg News.
But the minister also cautioned that it was not clear whether oil prices were rising due to “real supply and demand” or because of “expectations and trajectories that are excessively optimistic.”
A representative of the Saudi Energy Ministry didn’t immediately respond to a request for comment.
The comments suggest Riyadh is walking a fine line ahead of the OPEC+ meeting. Prince Abdulaziz said the group should remain cautious because the oil market wasn’t out of the “doldrums” created by the coronavirus pandemic. At the same time, he warned traders against conflating caution with inaction.
“We have to be cautious. But caution doesn’t mean we don’t have to do something,” he told the conference. “It means we have to ensure that we don’t make any missteps here or there.”
Prince Abdulaziz acknowledged the drop in global oil inventories and better expectations for demand during the second half of this year and into 2022. But he added that OPEC+ “cannot discount any vicious return of Covid cases,” and warned that the potential revival of production from Iran and Venezuela are big uncertainties the group needs to consider.